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Income is often recognized at the time of sale. However, there are some conditions in which...

Income is often recognized at the time of sale. However, there are some conditions in which income can be recognized not at the time of sale. Explain some of the time different revenue recognition with at the time of sale and give the argument why it is right!

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Answer #1

ACCORDING TO THE IFRS CRITERIA SOME CONDITIONS MUST BE SATISFIED FOR REVENUE TO BE RECOGNIZED. THESE CONDITIONS ARE LISTED BELOW:

1) RISK AND REWARDS OF OWNERSHIP HAVE BEEN TRANSFERRED FROM THE SELLER TO THE BUYER.

2) THE SELLER HAVE NO CONTROL OVER THE GOODS SOLD.

3) THE COLLECTION OF PAYMENT IS ASSURED.

4) THE AMOUNT OF REVENUE CAN BE MEASURED.

5) THE COST OF REVENUE CAN BE MEASURED.

THE FIRST TWO CONDITIONS REFER TO PERFORMANCE, THE THIRD REFERS TO COLLECTABILITY AND THE LAST TWO CONDITIONS REFER TO MEASURABILITY. THUS THESE ARE CONSIDERED AS REVENUE RECOGNITION.

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